With just three days to go for submitting expressions of interest for the government's 8 per cent stake in Maruti Udyog Ltd, the Life Insurance Corporation, Punjab National Bank and IDBI have put in their bids.
"We have expressed our interest in Maruti stake sale," SC Gupta, chairman and managing director of PNB, said in New Delhi on Sunday.
"Maruti is an actively traded scrip and is an attractive investment. While Maruti forms part of our equity portfolio, we do not have a large stake in the company," a senior PNB executive said.
The Maruti Saga: Complete Coverage
IDBI executives said the financial institution submitted its EoI on Thursday but did not disclose its bid size. "It is an attractive proposition. Let's see if we are shortlisted for the bidding stage," said an executive.
The last date for submission of EoI is January 4 and a large number of state-owned banks are expected to participate. Bank of Baroda executives said the bank had not yet decided if it would submit an EoI.
Divestment department officials confirmed that some EoI had been received. "There is going to be a very strong competitive intent. Almost all public sector banks and the insurance companies are expected to participate," said an official.
At present, LIC is the only public institution, which holds a significant stake in Maruti. It stood at 3.31 per cent at the end of September 2005.
The government holds 52,824,020 equity shares in Maruti, representing 18.28 per cent of the company's equity. Of this, 23,112,804 shares, representing 8.00 per cent of the equity, are on sale.
At Friday's closing price of Rs 636.50 on the Bombay Stock Exchange, the sale of shares is expected to fetch over Rs 1471 crore (Rs 14.71 billion) for the government.
Following the EoI, the government will call for price bids, which have to be benchmarked against the listed price.
The government has said the present holding of the institution in Maruti and the shares sold by the government put together should not exceed 10 per cent equity of Maruti on the date of transfer. The minimum bid value has been fixed at Rs 10 crore (Rs 100 million). The offer comes with a lock-in period of six months.
"The public financial institutions and banks would be interested in the bids as they can get a large chunk of the stake at a single price. Buying it in the secondary market would be much more expensive," one of the advisors to the government said.
Kotak Mahindra Capital Co Ltd and SBI Capital Markets Ltd are advising the government on the sale.